Why Is It So Hard For Women To Get VC Funding?

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Only 3% of all venture dollars were raised by female founders. That's gotta change.

Currently, the state of venture capital for female entrepreneurs has ways to go.

Venture-backed, women-founded companies only make up 17% of the world’s startups. And from 2012 to 2017, female-founded startups only raised around 3% of all venture dollars, while male-founded startups raised 86% (female and male-founded startups raised the remaining 11%).

Raising venture capital for female entrepreneurs: why is it so challenging for women?

Much of this is due to a sheer lack of representation; there are less women in the startup world than there are men, the reasons of which are many (but we won’t get into that here).

But basically, this gender gap can be attributed to misogyny — unintentional or otherwise.

Harvard Business Review got access to behind-closed-doors conversations between government venture capitalists in Sweden and observed the decision-making for two years. Though one-third of Swedish businesses are owned and run by women, only 13%-18% of government funding goes to women-owned businesses.

The language used by the venture capitalists spoke volumes:

Why Is It So Hard For Women To Get VC Funding?

Source: Harvard Business Review

Where are all the female venture capitalists?

According to Forbes, only 6% of venture capitalists are women. Because women are so underrepresented in venture capital, it’s not so surprising that women are receiving less funding.

“Because the vast majority of [venture capitalists] are men, I just don’t think they have that passion for female-focused businesses,” Heidi Zak, co-founder of bra company Third Love, wrote in this Forbes article. “They don’t use the products. They don’t understand the need. So it’s very hard for them to get excited about them.”

It’s time for men and women to start supporting female founders

Why Is It So Hard For Women To Get VC Funding?

Source: Shutterstock

Thankfully, this is changing. Though they are still vastly outnumbered by men, there are now more women venture capitalists making great strides to address the gender imbalance.

Some of these include Wei Hopeman, who co-founded Hong Kong-based Arbor Ventures in 2014.

“While there is a big gender imbalance in the industry, that should not stop women from advancing in venture capital,” Hopeman told South China Morning Post. “Women can also see what they can do differently, for example, by turning an adversity into opportunity.”

Pocket Sun, co-founder of SoGal Ventures, the first female-led millennial venture capital firm, says that she couldn’t just for someone else to level the playing field.

“Instead of saying, ‘Someone should do something about it,’ I asked myself, ‘What can I do about it?'” she writes in this Medium post. “The answer was clear but intimidating. I had to become a venture capitalist.”

 

We hope this article on venture capital for female entrepreneurs was helpful!

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